Murphy Conditionally Vetoes Pension Divestment Bills

In his veto Gov. Phil Murphy
argued the State Investment Council should make decisions as to where
the state pension fund should be allowed to invest. - (EDWIN J. TORRES/GOVERNOR'S OFFICE)

Gov. Phil Murphy has conditionally vetoed bills that would
have placed restrictions on where the state $78.6 billion pension fund
can invest its money.

The move bounces the bills back to the state Legislature.

Senate Bill 1208
would have prohibited investments in companies that failed to meet
their Superfund obligations in cleaning up heavily polluted sites.

Senate Bill 1914
would have prohibited pension investments into companies that engaged
in home foreclosures in areas of Puerto Rico ravaged by Hurricane Maria.

Murphy, in his Monday veto message, said he supported the ideas
behind both bills in theory but had concerns over divestment as a first
course of action. The governor also argued that the State Investment Council, not the Legislature, should decide where the state pension fund should be allowed to invest.

To that end, Murphy said he’d recommend the council institute an
“Environmental, Social and Governance” as a tool to pressure a company’s
behavior.

“The council recently took a similar approach with great success, by
convincing mortgage lenders to suspend foreclosures of Puerto Rican
properties in the wake of Hurricane Maria,” Murphy wrote in his veto
message. “Had divestiture been mandated, these lenders might still be
foreclosing on devastated families and hindering the island’s recovery
efforts.

Murphy also cited the Legislature’s Israeli company divestment bill
as a reason that Legislature shouldn’t be making the rules on
prohibiting pension investments.

“The state has spent more than $23 million monitoring the divestiture
of holdings as a result of recent statutory mandates to divest pension
system assets from companies that do business with Iran and companies
that boycott Israel and Israeli businesses,” Murphy wrote.

Murphy, before taking office, visited Puerto Rico to meet with its
governor, and later he signed Executive Order 10 establishing a
commission on Puerto Rico Relief.

“The administration acknowledges that divestiture is an appropriate
penalty in certain instances; however, it leads to question why the
administration wouldn’t agree that in this instance that divesture isn’t
warranted when the bill unanimously passed the Senate,” they said.